CRISIS IN THE PERSIAN GULF : State’s Farmers Take Double Hit During Crisis

California farmers are steeling themselves for a “double whammy” brought on by higher fuel costs and curtailed crop exports to Iraq required under the embargo imposed by President Bush.

Farmers say an increase in the price of diesel fuel has come at the worst time, with thousands of tractors and trucks busy bringing in a summer harvest of tomatoes, sugar beets, cantaloupes and alfalfa.

Increases in oil prices also adversely affect farmers who rely on petroleum-based pesticides and fertilizers. California growers, already reeling from the lengthy drought, must now spend more money on fuel used to pump water from underground wells, according to a spokesman for the California Farm Bureau Federation.

“Farmers are very concerned about where this whole thing is going to settle out,” said Bob Krauter, spokesman for the Sacramento-based federation that represents about 85,000 farmers.

Krauter said the U.S. Department of Agriculture’s energy office recently estimated that every $5 increase in the price of a barrel of oil results in a $2-billion increase in the cost of growing, processing and transporting food.

Alan Lines, an agricultural economist at Ohio State University, predicted that food prices will increase 3% to 5% during the next year, based on the $10-per-barrel increase in oil prices that has already occurred. On Wednesday, the price of light crude oil dropped about $2 to close at $26 a barrel on the New York Mercantile.

“All the farmers I talk to are grumbling about the cost of fuel going up,” said Bill Weir, a field crop adviser for the University of California cooperative extension program in Merced. “The farmers have to absorb the extra costs and suffer it out until the next season.” The U.S.-led embargo against shipping virtually every product to Iraq also affects the state’s farmers. In 1989, Iraq purchased $4.4 million in California crops, about a third of the $13.4 million of California-made goods sent to Iraq last year. The agricultural sales represent a fraction of the $3.5 billion in California farm exports to all countries, according to the California State World Trade Commission.

California almond growers are especially concerned about the situation in Kuwait because Middle Eastern nations purchased about 13 million pounds of California almonds this year, compared to about 11 million pounds in 1989.

Kuwait is a good almond customer, according to Dave Baker, director of member relations for the Blue Diamond Growers cooperative in Salida, north of Modesto.

“We are concerned that we might have some of that Middle Eastern market taken away from us now,” Baker said. He said wholesale almond prices to the trade have slipped from $1.65 a pound last year to about $1.10 a pound today.

He said the cooperative will sell about half of the 655 million pounds of almonds produced in California this year, with independent growers selling the other half.

Increased fuel costs also hurt nut growers who rely on motor-driven shakers, sweepers and pickup machines to harvest the crop, Baker said.

Bernell Harlan, who grows tomatoes, wheat and alfalfa with his partner on 3,500 acres in Woodland, Calif., said he is glad that he filled up his 25,000-gallon capacity fuel storage tanks before the Iraqis invaded Kuwait last week.

In late July, he ordered 11,000 gallons of gasoline and diesel fuel to be delivered before a planned increase in state fuel taxes which took effect Aug. 1. Harlan said he needs the fuel to operate about 23 trucks and 22 tractors on the farm.

He said he must absorb the current increase in fuel prices because he cannot pass along the costs to the buyers who signed contracts for his crops months ago.

“Our crops were all contracted for early,” Harlan said. Although the farmers will not be getting any more for their crops, he predicts the retailers will. “The prices will go up immediately in the grocery stores and be the last to come down,” Harlan said.

The embargo also affects about 10,000 bales of U.S. cotton Iraq ordered last year, according to Cathy Merlo of the Calcot cotton cooperative in Bakersfield. She said another 65,000 bales of cotton Iraq contracted to buy this year are also in limbo.